While it can be tempting to put all your resources into chasing new business, it can be more lucrative to improve your retention rate and build repeat custom. In this article, Andrew Dark, Director and Co-Owner of promotional product specialists Custom Planet, discusses how you can accomplish this.
Is the majority of your business’s marketing budget focused on targeting new customers? If yes, then you might want to think twice about this type of approach. In actual fact, putting the onus on retaining your current customers can benefit your company more than winning new business: research has found that by boosting retention rates by just 5%, you can increase profits by more than 25% (Bain).
But, while it’s easy to say “okay, let’s retain our clients”, it’s important to remember that this isn’t always as easy as it sound. There are usually always ways that you can improve your products and services that will help to lower customer churn and maximise profits. To help you out, I’ve listed a few ways that you can build customer retention for your business.
Know your customer base inside out
Before you can make the necessary changes to improve customer retention, you need to know your clientele inside out, finding out what they want and identifying reasons that they might be swapping to another brand. Armed with this information, you can make the right decisions for your business in order to win over people who may have been one-time customers previously.
One of the best ways to compile, access, and analyse this type of data is through a good customer relationship management (CRM) system, which should help you identify the key trends in your client behaviour. This should include information on purchase patterns, product usage, and customer service interactions that will help you spot the warning signals for when they’re about to churn.
Make customer experience your number one priority
When it comes to pin-pointing the aspects of your company to focus on to keep people coming back, the customer experience is the top seller. According to stats from Verint, 34% of the time, buyers switched brands due to a poor customer experience, which was more common than people swapping for a better price (31%). Therefore, you should look to prioritise this in your operation.
There are a number of ways you can improve your customer experience. If you think you already deliver a pretty good service to your clientele, you should take the time to really consider their feedback and make sure you address any points of concern fully, as well as highlighting what you do well and trying to find ways to extend it across your brand. If you believe you need an overhaul from top to bottom, think carefully about the ideal experience you’d like to provide, then work backwards to meticulously plan how you’re going to deliver.
Give your customers something to love about your brand
In addition to providing a fantastic customer experience, a great way of building customer retention is to give your clients something to love about your brand. If you have a few USPs that really sell your company to an audience, they’ll be more willing to stay loyal for the long-term. And, when you make customers care about your business, you’re more likely to benefit from word of mouth marketing as people share their passion for your goods and services.
A great example of this can be found in the global trend towards supporting brands that follow an ethical ethos. In 2018, 49% of the UK population said they have chosen not to buy a particular product or shop with a certain company due to concerns about their practices (Ethical Consumer). So, if you were to capture the public’s passion for this movement with your brand, you could potentially capture a larger market share that would stick with you as long as you continued to offer them an option for ethical products and services.
Reward your most loyal clients
Another great way of keeping your existing customers onside and open to repeat business is to reward loyalty. By offering discounts and incentives, you’re showing that your brand really appreciates its customers, and, in turn, they will be much more likely to reciprocate by sticking with your company when they next make a buying decision.
If you can’t quite afford to offer rewards across your whole customer base, then it can still be useful to identify a smaller group of profitable clients and ensure they get that VIP treatment. This way, you’ll be able to build up a highly valuable relationship with the customers that will provide the biggest payoff with repeat business.
Utilise corporate gifts to create brand awareness
Similar to offering rewards for loyalty, you can also make use of corporate gifting to show that your company cares and to build positive relationships with your most valued clients. In addition, if you add your logo and name to your gifts, it’s possible to build brand awareness that will always keep your company at the forefront of your clients’ mind for repeat business.
These promotional gifts don’t even need to be high value to have the desired impact. If you consider your client’s needs and choose a useful product that’s used all the time, you may be able to secure extended exposure for your company. For instance, a customer who works in an office environment is much more likely to appreciate useful stationery items, and if they’re using them every day, they’ll also be seeing your logo and name, too.
Take my five ideas on board and you will be able to maximise your potential for customer retention for increased profits.
CAPITAL MARKETS – LIQUIDITY MANAGEMENT DURING COVID-19
Tony Farnfield, Partner at management and technology consultancy, BearingPoint
When “Dr. Doom” predicted the 2008 financial crisis back in 2006, and spoke of a necessitated market correction and was calling for the repricing of riskier assets; predicting a continuation of a global financial slowdown, or even a global recession starting in 2020, this prediction was based on known factors affecting the global economy. The unforeseen outbreak of Covid-19 and the increased volatility this has brought to global financial markets was not taken into account.
Three months on from the initial outbreak, and we have already witnessed the biggest intraday drop in the Dow Jones Industrial Average. The outbreak, coupled with the oil price shock, triggered responses from the Federal Reserve, the Bank of England and Central Bank of Canada to cut benchmarks rates in an effort to even out the shock to the wider economies.
There is a high degree of uncertainty on how the coronavirus crisis will unfold. We could experience only a temporary disruption – lasting from a few weeks to a few months, or a prolonged stress in markets, assuming that it will be months until vaccine clinical trials begin and with rate cuts (already reaching bottom) having limited effects on the required stimulus.
Banks have undeniably improved their liquidity following regulatory guidance post financial crisis; however, treasury departments will need to prepare and caveat for a wide range of possible outcomes. Traditional stress testing, scenario development and re-calibration have not taken into account conditions such as the ones experienced with the Covid-19 outbreak or the speed with which things evolved.
At a generic level, there are three key steps Treasurer’s should look to take:
- Convert uncertainties into emerging and quantifiable risks
This is already being considered by some of the larger financial institutions under their crisis management responses. However, it’s important to highlight that even for those that have triggered the crisis management process, the forecasting, rebalancing and risk assessment should be continuous, taking into account new developments in the following manner:
Continuously monitor and develop scenarios of potential sources that could disrupt funding and liquidity usage. With the right analytical capability, cash-flow projections should adapt to changing scenarios, including scenarios coming from the different business lines. Scenario sources could include unexpected credit usage that could encourage either large prepayments or defaults, or changing corporate customer behaviour – deposit inflows from corporates and depositors affecting leverage-constrained institutions. Also, there should be some consideration given to the availability of funding sources or, for wholesale funding, acceleration or reduction of funding plans.
Take immediate actions in increasing liquidity and cash holdings in the short term to cover for the uncertainty.
Continuous risk assessment
Account for emerging risks previously not accounted for, such as the temporary closure of operations or reduced capacity of market utilities. Assess those scenarios and how these are captured and factored in stress tests. Intraday liquidity should be the primary focus to understand immediate cash requirements.
- Refine your liquidity risk measurement
Better identification, measurement and analysis of key liquidity drivers should become core for an institution’s ability to effectively manage and mitigate particularly unique risks not previously considered. To do this, Treasurers should consider the frequency of their monitoring, and increase levels to daily stress tests and daily Early Warning Indicator testing to include daily developments.
In-depth analysis of risks
Re-run your liquidity risk identification exercise to understand better your current exposures, especially examining certain instances of this outbreak crisis, e.g. oil-related exposures, airline, marine or supply chain related exposures etc.
Re-calibrate based on new understanding
Re-assess existing scenarios or add new scenarios in covering a range of events and timeframes (e.g. sustained spread of the virus over x months vs limited spread and containment). Revisit your Early Warning Indicators to monitor emerging risks. At a later point, revisit these to assess if market signals existed and if they were picked up by your indicators.
- Review your mitigation plan
Identification, assessment and measurement is only part of the overall response. Stresses or risks that can be crystallised need to be accompanied by mitigative actions, agile and feasible enough under the current market conditions. Contingency funding actions might need to be revisited to determine if additional actions need to be considered.
Revisit and verify the availability of near real time reports, such as positions of securities holdings reports. Such information should be readily available and synthesised in the event that you will need to communicate clear and concise plans to investors, regulators or other market participants in relation to liquidity management strategies to foster confidence in the market.
In summary, reviewing and preserving an institution’s liquidity under extreme and volatile circumstances is the core responsibility of any treasurer. However, we know that any scenario or contingency planning is unlikely to be fully predictive of unprecedented scenarios such as this. Re-visiting already set practices and testing their efficacy and completeness should be the first step before considering inserting new scenarios and new actions into the mix. Nothing tried and tested can always remain true.
STOP THE CONFUSION: HOW TO KNOW IF YOUR BUSINESS MAY BE INSURED AGAINST COVID-19
By Alex Balcombe, Partner at Harris Balcombe
The last few weeks has seen businesses in hospitality, tourism, retail, leisure and more forced to close their doors following the Government’s orders that they should close to prevent the spread of coronavirus.
While this is expected to flatten the curve and reduce the number of coronavirus cases, it will of course have an impact on businesses and employees alike. For small businesses especially, there are many concerns about how they can claim on their insurance to weigh the fall of this impact.
In response to calls to help struggling businesses, the Government has informed the public that companies who are facing turmoil will be able to claim on their business interruption insurance during this difficult time. For most, this is wrong.
The insurance industry has also been extremely vocal that there is no cover for any coronavirus-hit businesses during this tough financial period. This isn’t strictly true either.
How can businesses see through the mixed messaging and best secure their future and their livelihoods and reduce money worries? It’s an extremely stressful time for many companies, and confusion over whether or not they can be covered can only cause more unnecessary stress.
Since it’s a new disease, most businesses will not be covered for business interruption due to COVID-19. In fact, the vast majority of policies do not cover anything related to COVID-19.
That said – don’t rule out the idea that you may be covered. There is a chance that you will be covered against COVID-19, but not know it. This is a very small chance, but your current cover may already protect your business against the consequences of coronavirus, and the nationwide response to it – though those with this cover are unlikely to realise it.
How Could I Be Covered?
Not everyone has business interruption insurance, as it’s not a legal requirement. It is entirely up to the policy holder to weigh up the benefits of having it, and their ability to trade should a disaster happen.
To be considered for cover for COVID-19, there are two types of policy extensions to your business interruption cover that can potentially cover you for this situation:
Infectious Disease Extension
Many policies expressly state which diseases fall within the realm of being an infectious or notifiable disease. If this is the case, your policy will not provide cover. As it is a new disease, these policies will not have included COVID-19.
Other infectious disease extension policies will define the disease with reference to the actions of the government. Since the UK Government has named COVID-19 as a notifiable disease throughout the UK, it is possible that your business may fall into this definition, thus meaning you may be able to make a claim.
However, again, it’s not always that simple. Many policies require the disease to have been on your premises, while others specify a radius from your premises in order to qualify.
Denial of Access Extension (non-damage)
Denial of Access Extension (non-damage) policies may cover you if you’re prevented from accessing your property. This could be due to an event, or by the actions of a competent authority, which could cause your business interruption cover to engage.
If covered by this clause, there are often very subtle differences in wording in your policy. This could depend on the insurer or policy. You may well be covered, but it will depend on your particular circumstances, and the specific policy wording.
It’s clear that the Government needs to do more in ensuring there is clear messaging for businesses, and to help the insurance market look after policy holders. This is an unprecedented situation, and with many people looking to claim on their insurance, we’re already seeing major delays which could have a domino impact.
People throughout the world are understandably facing all kinds of worries because of the current pandemic. Our ways of living have changed, and many business owners will not have experienced a situation like this in their life times. If you own a business and are unsure about whether you can claim for business interruption, or are confused about ambiguous wording, get in touch with a loss assessor.
These claims are not simple, but loss assessors will be experts in business interruption insurance, and will specialise in large and complex claims. They will be able to help and guide you along the way, check your wording and work on your behalf to make sure you get everything you are entitled to.
CAPITAL MARKETS – LIQUIDITY MANAGEMENT DURING COVID-19
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